part 1 Strategic Analysis
Chapter 1
Strategic Management: Creating Competitive Advantages 2 (1-2)
What Is Strategic Management? 8 (1-5)
Defining Strategic Management 8 (1-5)
The Four Key Attributes of Strategic Management 9 (1-6)
The Strategic Management Process 10 (1-7)
Intended versus Realized Strategies 10 (1-7)
Strategy Analysis 12 (1-7)
Strategy Formulation 14 (1-8)
Strategy Implementation 14 (1-8)
The Role of Corporate Governance
and Stakeholder Management 15 (1-8)
Alternative Perspectives of Stakeholder Management 16 (1-10)
Social Responsibility and Environmental Sustainability:
Moving beyond the Immediate Stakeholders 18 (1-11)
The Strategic Management Perspective:
An Imperative throughout the Organization 22 (1-13)
Ensuring Coherence in Strategic Direction 23 (1-14)
Organizational Vision 24 (1-14)
Mission Statements 26 (1-16)
Strategic Objectives 27 (1-17)
Issue for Debate 29 (1-19)
Reflecting on Career Implications 29 (1-20)
Summary 30 (1-22)
,Chapter 1
Strategic Management:
Creating Competitive Advantages
Summary/Objectives
At the heart of strategic management is the question: “How and why do some firms
outperform others?” The challenge to managers is to develop and implement strategies that
will provide competitive advantages that will be sustainable over time. This chapter is
divided into five sections.
1. The first section addresses the broad question: “What is strategic
management?” Here, we define strategic management as “consisting of
the analysis, decisions, and actions an organization undertakes to create
and sustain competitive advantages.” We also address the four key
attributes of strategic management: concern with overall objectives;
involvement of multiple stakeholders; incorporation of short- and long-
term perspectives; and recognition of tradeoffs between effectiveness
and efficiency. We also introduce the concept of “ambidextrous
behaviors”—the need to combine alignment and adaptability.
2. The second section discusses the strategic management process. Here, we
present the three processes—analysis, formulation, and implementation
—that provide the framework for the overall organization of the thirteen
chapters of the book.
3. The third section focuses on the vital role of corporate governance, which is
essential to ensuring that the actions of a firm’s management are consistent with
the goals of its owners—the shareholders. We also address stakeholder
management. It must be taken into account throughout the strategic
management process. Although the interests of stakeholders may, at times,
, conflict, we discuss how firms are able to achieve “symbiosis” among
stakeholders wherein various interests are considered interdependent and can
be attained simultaneously. We address the importance of social responsibility,
including environmental sustainability, as well as challenges associated with
making the case for sustainability initiatives.
4. The fourth section addresses today’s greater need for a strategic management
perspective throughout the organization. With the emergence of the knowledge
of economy and globalization, leaders must mobilize people throughout the
organization.
5. The fifth section discusses the need for organizations to attain consistency in
their vision, mission, and strategic objectives. Collectively, they form a hierarchy
of goals.
, Lecture/Discussion Outline
We begin the chapter in LEARNING FROM MISTAKES with a clever quote from
Arthur Martinez, Sears’s former chairman: “Today’s peacock is tomorrow’s feather duster”
to help illustrate the rapid turnover among the Fortune 500 firms over a period of time.
With rapid changing technologies and intensified global competition success can be
temporary.
The SUPPLEMENT below, from a recent article in The Economist, provides some
additional insight.
Extra Example: Rapid Turnover among Industry Leaders
In the 1950s and 1960s the corporate world was ruled by cabals of giants—by the “Big Three” in
American cars and broadcasting and the “Seven Sisters” in global oil. C. Wright Mills, a sociologist,
complained that America was ruled by a tiny elite. J.K. Galbraith, an economist, argued that there was
not much difference between state planning as practiced by the Russians and corporate planning as
practiced by General Motors.
Today’s corporate world could hardly be more different. Time is being compressed: Google was
incorporated only in 1998 but is now one of the world’s biggest companies. Geography too is being
tightened: who would have guessed in Galbraith’s day that one of the world’s leading aircraft-makers
would be Brazilian (Embraer) or that one of the most innovative clothes brands would be Spanish
(Zara)? In 1980 a corporation in the top fifth of its industry had only a 10 percent chance of falling
out of that tier in five years. Eighteen years later that chance had risen to 25 percent.
Source: Anonymous. 2013. The transience of power. The Economist. March 16: 70.
Discussion Question 1: What are the implications for your careers? (This is a rather
general question, but it might help remind students that they must be sensitive to
changes in industry dynamics that could provide new opportunities—as well as,
perhaps, erode opportunities that they may have thought they had in a particular
industry.)
Chapter 1
Strategic Management: Creating Competitive Advantages 2 (1-2)
What Is Strategic Management? 8 (1-5)
Defining Strategic Management 8 (1-5)
The Four Key Attributes of Strategic Management 9 (1-6)
The Strategic Management Process 10 (1-7)
Intended versus Realized Strategies 10 (1-7)
Strategy Analysis 12 (1-7)
Strategy Formulation 14 (1-8)
Strategy Implementation 14 (1-8)
The Role of Corporate Governance
and Stakeholder Management 15 (1-8)
Alternative Perspectives of Stakeholder Management 16 (1-10)
Social Responsibility and Environmental Sustainability:
Moving beyond the Immediate Stakeholders 18 (1-11)
The Strategic Management Perspective:
An Imperative throughout the Organization 22 (1-13)
Ensuring Coherence in Strategic Direction 23 (1-14)
Organizational Vision 24 (1-14)
Mission Statements 26 (1-16)
Strategic Objectives 27 (1-17)
Issue for Debate 29 (1-19)
Reflecting on Career Implications 29 (1-20)
Summary 30 (1-22)
,Chapter 1
Strategic Management:
Creating Competitive Advantages
Summary/Objectives
At the heart of strategic management is the question: “How and why do some firms
outperform others?” The challenge to managers is to develop and implement strategies that
will provide competitive advantages that will be sustainable over time. This chapter is
divided into five sections.
1. The first section addresses the broad question: “What is strategic
management?” Here, we define strategic management as “consisting of
the analysis, decisions, and actions an organization undertakes to create
and sustain competitive advantages.” We also address the four key
attributes of strategic management: concern with overall objectives;
involvement of multiple stakeholders; incorporation of short- and long-
term perspectives; and recognition of tradeoffs between effectiveness
and efficiency. We also introduce the concept of “ambidextrous
behaviors”—the need to combine alignment and adaptability.
2. The second section discusses the strategic management process. Here, we
present the three processes—analysis, formulation, and implementation
—that provide the framework for the overall organization of the thirteen
chapters of the book.
3. The third section focuses on the vital role of corporate governance, which is
essential to ensuring that the actions of a firm’s management are consistent with
the goals of its owners—the shareholders. We also address stakeholder
management. It must be taken into account throughout the strategic
management process. Although the interests of stakeholders may, at times,
, conflict, we discuss how firms are able to achieve “symbiosis” among
stakeholders wherein various interests are considered interdependent and can
be attained simultaneously. We address the importance of social responsibility,
including environmental sustainability, as well as challenges associated with
making the case for sustainability initiatives.
4. The fourth section addresses today’s greater need for a strategic management
perspective throughout the organization. With the emergence of the knowledge
of economy and globalization, leaders must mobilize people throughout the
organization.
5. The fifth section discusses the need for organizations to attain consistency in
their vision, mission, and strategic objectives. Collectively, they form a hierarchy
of goals.
, Lecture/Discussion Outline
We begin the chapter in LEARNING FROM MISTAKES with a clever quote from
Arthur Martinez, Sears’s former chairman: “Today’s peacock is tomorrow’s feather duster”
to help illustrate the rapid turnover among the Fortune 500 firms over a period of time.
With rapid changing technologies and intensified global competition success can be
temporary.
The SUPPLEMENT below, from a recent article in The Economist, provides some
additional insight.
Extra Example: Rapid Turnover among Industry Leaders
In the 1950s and 1960s the corporate world was ruled by cabals of giants—by the “Big Three” in
American cars and broadcasting and the “Seven Sisters” in global oil. C. Wright Mills, a sociologist,
complained that America was ruled by a tiny elite. J.K. Galbraith, an economist, argued that there was
not much difference between state planning as practiced by the Russians and corporate planning as
practiced by General Motors.
Today’s corporate world could hardly be more different. Time is being compressed: Google was
incorporated only in 1998 but is now one of the world’s biggest companies. Geography too is being
tightened: who would have guessed in Galbraith’s day that one of the world’s leading aircraft-makers
would be Brazilian (Embraer) or that one of the most innovative clothes brands would be Spanish
(Zara)? In 1980 a corporation in the top fifth of its industry had only a 10 percent chance of falling
out of that tier in five years. Eighteen years later that chance had risen to 25 percent.
Source: Anonymous. 2013. The transience of power. The Economist. March 16: 70.
Discussion Question 1: What are the implications for your careers? (This is a rather
general question, but it might help remind students that they must be sensitive to
changes in industry dynamics that could provide new opportunities—as well as,
perhaps, erode opportunities that they may have thought they had in a particular
industry.)
